Economics is the last leg of our reinvention trilogy.
Traditional economics frames the central problem of economics in terms of purely bilateral exchanges between ‘rational’ buyers and sellers exchanging money for tangible goods in markets which are always naturally tending to equilibrium.
This perspective fitted the product-focused technologies of the mid 20th century, but it’s incredibly myopic in some ways and downright crazy in others.
In the 21st century, our vision is expanding to see a much bigger, more complex and exciting picture. The narrow bilateral focus of economics (and traditional marketing) on exchanges between buyers and sellers ignores or downplays context – the nature of the ecosystems or networks which frame how and why bilateral exchanges take. Economics’ one nod to this reality – the importance of ‘the market’ – is misleading. Markets never tends towards equilibrium: real networks and ecosystems are, in fact, always generating novelty.
Economists’ traditional focus on exchanges of money for goods exclude all the other dimensions of value that people give, trade, exchange and share: e.g. intangibles such as ideas, information and emotion. And economists’ definition of ‘rational’ decision-making has about the same scientific validity as 1) assuming that every living organism is actually a breed of pink flying elephant, and 2) comparing the living creatures we see in the world around us to the pink elephant ideal. Every time you see phrases such as ‘rational decision-making’ or ‘rational behaviour’, think ‘flying pink elephants’.
For marketers, this is a toxic legacy.
• It makes the firm the centre of economic gravity, equating economic success with improving the economics of the firm. This contorts marketers’ vision of consumer value, and helps generate endemic diseases such as brand narcissism and misleading marketing metrics.
• Its rationality/pink elephant assumptions create confusions which confound many a marketing debate to this day. Two examples: 1) the supposed distinction between ‘emotional’ and ‘rational’ appeals, and 2) confusion about what marketing actually affects – is it rational decision-making or something else? If so, what?
• Its magical belief in ‘markets as equilibrium machines’ (‘the hidden hand’) neatly defines away its biggest challenge: how to design and maintain sustainable win-win social and commercial ecosystems?
To successfully reinvent marketing we will need to slay these dragons!
Alan Mitchell www.ctrl-shift.co.uk
